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18 May 2010
Special Servicer for the RMAC series and the RMAC Securities No. 1 series
London, 18 May 2010 -- Moody's Investors Service said today that GMAC-RFC Ltd's
(GMAC, not rated) servicer infrastructure has been maintained since
the rating agency's prior visit in 2008. As indicated in
the press release entitled "Moody's update on RMBS transactions
affected by Fortress' Acquisition of GMAC's European Mortgage Business"
on 11 May, Moody's will continue to observe GMAC's servicing
platform as the change of ownership announced on the 12 of April may potentially
impact GMAC's quality of servicing.
As part of Moody's surveillance process of residential mortgage-backed
securities (RMBS) transactions, it regularly meets with servicers
to monitor their quality and discuss any changes to the servicing infrastructure
since Moody's previous visit. On 11 March, Moody's
met with GMAC, which is the special servicer for 17 Moody's-rated
outstanding RMBS transactions:
- 12 RMAC transactions (RMAC 2003 NS1 Plc to RMAC 2005 NSP2 Plc)
- Five RMAC Securities transactions: (RMAC Securities No1
Plc Series 2006-NS1 to RMAC Securities No 1 Plc Series 2007-NS1)
As of March 2010, the total outstanding balance of these 17 transactions
was GBP3.6 billion .
As special servicer for these transactions, GMAC's responsibilities
include: (i) overseeing the day-to-day operations
of Homeloan Management Ltd (HML, SQ2+), which is acting
as the loan administrator for these transactions; (ii) determining
the servicer's strategy; (iii) making decisions on cases which are
outside HML's mandate; and (iv) managing the repossession and
sale process of the real estate property, which includes overseeing
the third parties involved in these processes (e.g. solicitors,
MOODY'S UPDATED OPINION ON GMAC'S SERVICING OPERATION.
Moody's believes that GMAC has significantly enhanced its control
and governance framework (including its oversight of the loan's
administration) since its prior review in 2008 and considers that it currently
has one of the most advanced frameworks of its peers.
GMAC now has direct access to credit bureau data when assessing a borrower's
financial condition in order to offer an arrangement-to-pay
(ATP) or a loan modification. Moody's believes that this
is best practise as it validates a borrower's indebtedness and provides
additional comfort that the proposed repayment plan may be sustainable.
This is demonstrated by the improvement of the ratio of honoured ATPs
as a percentage of ATPs due. In addition, GMAC appears to
have better results than its peers when comparing this ratio.
The time for GMAC to sell a property after repossession is approximately
equal to Moody's calculated UK non-conforming 2009 market
average (i.e. 170 days), as is its sales price as
a percentage of asking price (i.e. 92%).
Moody's views positively the standardisation and automation of management
information from GMAC's third party agents, as it ensures
that information is comparable and has also enhanced the overall monitoring
and control framework. The work has been completed for its asset
managers and is under way for its solicitors.
GMAC's shortfall recovery and professional negligence infrastructure
are well-established and provide additional recovery on a constant
Moody's notes that the turnover rate within GMAC servicing team
is higher than its peers. This could potentially put some strain
on its servicing stability if it remains at this level.
Since our previous review, GMAC has enhanced its risk grading model,
which now also includes updated credit bureau data in addition to the
loan characteristics which were previously used. The risk grading
model is one of the variables determining the call collection campaign.
While Moody's views positively this updated risk grading model,
it believes that a behavioural score based on statistical model can further
assist the servicer in developing collection strategies and should ultimately
aim at reducing arrears.
The call centre (operated by HML) opening hours appears to be in line
with market practices. GMAC starts calling its borrowers within
48 hours of a failed direct debit, like most of its peers.
Finally, Moody's considers that the fine imposed by the Financial
Services Authority (FSA) on 29 October 2009 has no impact on its analysis
as it appears that most of the FSA's concerns have now been addressed.
SECURITISED PORTFOLIO PERFORMANCE
As of February 2010, the 90+ delinquency RMAC index (as a percentage
of the current balance) was 22.61%, which is 18%
higher than the UK non-conforming index (19.22%).
The RMAC cumulative losses as a percentage of the original pool balance
were 0.87%, which is 43% lower than the UK
non-conforming index (1.52%). The RMAC delinquency
and cumulative losses index includes the performance data for the 12 RMAC
transactions and the five RMAC securities transactions.
GMAC'S SERVICING INFRASTRUCTURE - UPDATE
Since Moody's prior review, GMAC has restructured its servicing
operations as follows. The director of operations has a team of
10.5 full time employees, who are responsible for:
- The oversight of the collection process (i.e. cases
that fall outside HML's mandate, managing the collection campaigns
and the solicitors panel);
- The oversight of the primary servicing activities; and
- The management of complaints
The repossession and loss recovery process are now managed by the special
servicing team. However, the head of the special servicing
department was previously in charge of this function and the team has
remained relatively constant. The special servicing team also performs
the credit management for the on-balance sheet assets.
The chief operating officer (COO) has changed since Moody's previous
visit. The current COO was previously responsible for GMAC's
sales and marketing department. He has more than 20 years experience
in the mortgage industry primarily and has been with the company since
its inception in 1987. The director of operations has almost 30
years of financial services experience and has been with GMAC for the
past 10 years.
In common with its peers, GMAC's staff have prior work experience
in financial services gained as administrators, collectors or underwriters.
Moody's publishes a weekly summary of structured finance credit,
ratings and methodologies, available to all registered users of
our website, at www.moodys.com/SFQuickCheck.
For further information, please visit our website directly or contact
Moody's Client Service Desk (+44 20) 7772 5454. Additional
information on the referenced Moody's rated RMBS transactions,
including the latest Performance Overview, is available at www.moodys.com.
Structured Finance Group
Moody's France S.A.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's updates on GMAC-RFC Ltd as special servicer of 17 UK non-conforming RMBS deals rated by Moody's
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
No Related Data.
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